Access to Financial Services

According to  the Americans Resident Abroad Working Group, many Americans abroad noted that they have problems opening or maintaining local financial accounts, because the Foreign Account Tax Compliance Act (FATCA) makes it burdensome and even risky for foreign banks to have US citizens as clients. Making matters worse is the fact that in some instances investment portfolios had to be sold at a considerable loss.

What is more, the list of banks, brokers and other financial institutions that will no longer provide services for Americans abroad continues to grow. And banks, which do accept American clients, are imposing restrictions on the kinds of investments that they may make. Worse still, some town hall participants reported that they had problems with their accounts in the US, as the implementation of FATCA has resulted in uncertainty about the legal and administrative implications of having Americans who live outside the US as clients.

The upshot is that Americans, including small business owners who create markets for American products, are finding it very difficult to maintain a normal economic life while living abroad.

Have you experienced any difficulties opening or maintaining local financial accounts in your country of residence because you are American?

Support the Commission on Americans Living Abroad Act

As readers of this blog will recall, Congresswoman Maloney (D, NY-12), founder of the Americans Abroad Caucus, together with Congressman Honda (D, CA-17) as an original co-sponsor, introduced H.R. 597, the Commission on Americans Living Abroad Act earlier this year.

The bill would simply establish a Commission on Americans Living Abroad to carry out a study of how federal law and policy impact US citizens living abroad. The bill summary and status are available from the Library of Congress here. And you can easily show your support for and spread the word about the bill on POPVOX.

The bill currently has 16 co-sponsors. If your Representative is not one of them, which you can verify here, please write or call them and ask them to do so. Gathering co-sponsors is key to getting the bill passed. Contact your representative and encourage him or her to co-sponsor this important piece of legislation. You can write a letter to your representative with the easy-to-use tools on POPVOX – suggested language:

Dear Mr./Mrs/Miss  ___________:

As one of your constituents, I request that you co-sponsor bill H.R. 597, the Commission on Americans Living Abroad Act, to examine the range of issues faced by the 6 million Americans who live outside the United States.  This Commission would be extremely helpful in recognizing the contribution of Americans abroad to the American political process and the U.S. economy… (add your personal story here – when Members of Congress are undecided on a bill, they are most influenced by personalized stories from constituents.)

New Jersey Special

New Jersey voters abroad, if you haven’t already done so, you should request your absentee ballot for the special election to fill the seat of Senator Frank Lautenberg on October 16 2013. The deadline for registered voters to request a ballot is Friday, August 9th. You can request your ballot via the Overseas Vote Foundation.

Don’t delay!

Online filing of FBARs

This site may remain undiscovered for a while due to the ‘insider’ language and implied process knowledge necessary to properly upload files.

It took a while, even with the tour, to figure out who the intended audience / user group is – but here is where FBARs are now uploaded:

http://1.usa.gov/1blkE3l

Welcome to your new role in the Financial Crimes Enforcement Network.

Residence Based Taxation: the Video

An excellent video on residence based taxation (“RBT”) from American Citizens Abroad. This is a must-see video that clearly demonstrates the complexity of citizenship based taxation and the simplicity of RBT. Spread the word”

FATCA and Citizen-based Taxation: the way forward

My presentation at the Nordic FATCA & Withholding Tax Conference, 12 June 2013.

The IRS and its Offshore Voluntary Disclosure Programs

Another disturbing fact highlighted in the Findings and Recommendations of the Americans Resident Abroad Working Group (PDF) is the fact that the IRS Offshore Voluntary Disclosure Programs (OVDP), which was designed to encourage delinquent taxpayers to come into compliance, “appears to have been implemented in a deceptive and unfair way.”

As press accounts over the past few years have made clear, some individuals who actually owed no or minimal tax and had simply made filing mistakes were fined in amounts representing significant parts of their life savings. The OVDP programs were aimed at tax cheats, but have been applied equally to those who made simple errors of omission and oversight. The December 2011 report of the IRS Taxpayer Advocate  includes sharp comments about this improper behavior.

Have you or someone you know been treated unfairly by the IRS in the OVDP program? If so, please share your story.

 

Another Way to Make your Voice Heard

House Ways and Means Chairman Dave Camp (R-Mich.) and Senate Finance Chairman Max Baucus (D-Mont.) have launched two new online channels seeking comments on tax reform:

1. Website – taxreform.gov
2. Twitter – @simplertaxes

These channels give taxpayers input into the tax reform process by allowing them to share their concerns and tell their personal stories. This is particularly important for Americans abroad struggling under the oppressive and byzantine bureaucratic morass of double taxation, FATCA and FBAR reporting. So please share your story today.

Protecting American citizens’ data overseas

Guest poster Mike Kicklighter has built his career and skills inside international banks, corporates, and global exchanges. He has worked up close with the Swedish personal data privacy law (PUL) and has managed projects involving the protection, administration, and transfer of sensitive details for tens of thousands of people. He personally has been the target of spear phishing and has ‘won’ the Spanish el Gordo Lottery without ever having played. //

 

“It’s Bob, he says he’s from the IRS…”

I’ve seen a lot of things over the years working as a financial services consultant. I change assignments fairly regularly and have kept up to date on technology, trends, and new regulations. The job is often like solving a big puzzle. Find the corner pieces and edges and get to work. There is a lot of activity at work regarding FATCA right now.

The other day a person in my network asked me to look at an email sent to him from the Internal Revenue Service. It had an ‘@irs.gov’ sender address, professional graphics and at first glance all the superficial signs of legitimacy.

He asked, “What do I do?” After a simple gut-check I told him not to open it.

First, it was email – from the IRS. Second, it had a .ZIP attachment and for the life of me I couldn’t imagine the IRS managing .ZIP files in their organization. I guessed it was probably a virus / trojan or phishing attempt and if I hadn’t been there they would have opened the email and attachment. Who knows what would have happened next? Who knows if it was legitimate!

It was then  it struck me – there is a missing corner piece in the FATCA puzzle – a frighteningly serious one and it isn’t about business integration, service management, or customer support…It is about IDENTIFICATION. There is absolutely no way for a foreign employee sitting on this side of the Atlantic to verify the identity of an IRS employee or legitimate IRS request. Zero.

Responsibility sits with the US government.

Every foreign employee I have met knows FATCA is holding US dollar payments like a club over the head over their employer. When FATCA was pushed onto the world it kicked-off by avoiding the established state-to-state relationships that have functioned for decades. As a result, instead of taking instructions from the established local authorities the US is aggressively inserting itself as a local regulator.

Now, when the US fills the role of a local regulator on foreign soil under the umbrella of FATCA, it does so without providing any authorization channels or any means of verifying the identities of its staff overseas. I am guessing we can forget any multi-time zone, multilingual service desks…

A hypothetical conversation at a foreign IT shared service center (in English for convenience):

> Hey, it’s Bob from the IRS, he says we need to send another US data file. Servers are being patched in his time zone – need to send it to a mirror site.

>>Ok, everything?

>Yeah, he’s on the phone. They want kids details too – Sounds important …but shouldn’t we get some approval first? We’ve never used that server before.

>>Nah, Americans aren’t covered by any data privacy restrictions like we are. Just send it, I don’t want to get in any trouble.

>Done! It’s on the way …

It really can go that quick. A matter of minutes and no way to recall. Does the US really grasp the consequences of forcing the world to track down its citizens? Have they considered where this data may end up next? How it can be misused?

Several million Americans are about to find out. I am afraid that in the near future the personal and financial details of many Americans overseas will be up for grabs on torrent servers, dumped in internet paste bins and burned to DVDs that get ‘lost’ – solely because of FATCA and their inability to function as a local regulator overseas – much less manage a multi-time zone, multilingual, international support operation.

Just ask an international bank how easy that is.

 

Paperwork for Americans abroad

It’s that time of year again. Americans who own or have signatory authority over foreign accounts whose aggregate value exceeded $10,000 at any time during 2012 must file Treasury Department Form TD F 90-22.1 — the Report of Foreign Bank and Financial Accounts or “FBAR”.

Not that this is not a tax form and must be sent directly to the Treasury Department by June 30, 2013. For details, see Publication 4261: Do You Have a Foreign Financial Account? Though the FBAR form may be filed on paper, Treasury encourages taxpayers to file it electronically, which you can do here.